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Tentative first steps

Hi, new here, we're in the process of considering an IVA and we're worried and confused about several things. First of all, a brief overview of our situation:

Around 2 years ago we realised we were getting into difficulties with a total debt of 52k so we went to see our bank with a very detailed proposal to take a mortgage holiday for 6 months (mortgage at the time was £2k a month - more due to the term than the capital amount). Our plan would have enabled us to reduce our debt to 34k by the end of those 6 months and we then would have "breathing space" and we already had plans to clear the rest down. So, effectively, a DMP of our own making. However... Lloyds' "computer said NO!"... We were told that as a responsible bank they could not allow us to get further into debt which would have happened with the additional interest accruing on the mortgage whilst we weren't paying it. So, their solution was to increase the term on one of the sub-accounts of the mortgage thus reducing the mortgage payment by £200 and lending my husband more money in the form of a 25k consolidation loan! :mad:

So, now 2 years further down the line, with all the increased costs of petrol etc, a couple of crisis and still not having enough money to live on each month without paying for our food on credit cards - we are now 107k in debt. I'll be honest, we did not realise until we filled in the CCCS form just how much there was :(

Not unsurprisingly, CCCS have recommended that we take out an IVA as a DMP would last almost 20 years.

The debt breakdown is approximately (spread pretty evenly between us):

42k personal loans with Lloyds (the second of which was taken out last November)
26k in credit cards with Lloyds
2k overdrafts with Lloyds
20k with Egg
11k M&S credit card
8k Virgin
2k Capital One
800 Next

Our home value is currently in the region of 340k with a mortgage of just under 260k.

Our main concern is that as there is so much tied up with Lloyds, with whom we also have our mortgage, will they actually accept an IVA? We have two young children (6 & 8) and we really do not want to be in a bankruptcy situation whereby we lose our home.

We are both on a good wage and so will be able to make payments of approximately £400+ based on the budget calculator on CCCS. We have never missed a payment on anything but we have really now reached a point where we have no more Peters to rob....

We have been doing lots of research and we know that we need to open a new bank account - we were thinking of Nationwide but several people seem to be recommending the Co-op - can anyone give some advice as to which of these would be the better option?

Also, finally, we have maybe panicked a bit in our "preparations" for having no money and have ordered/bought a load of stuff in the sales to keep the children in clothes for the next few years etc. We are now worried that this may be seen as a cynical move on our part i.e. spending everything we can, knowing that we are intending to enter into an IVA and will not be looked upon favourably when considering our proposal and voting. Should we reverse our panic and return everything??

Any advice or suggestions would be very gratefully received.


  • FoggyBrain_2
    FoggyBrain_2 Posts: 1,121 Forumite
    edited 16 July 2011 at 1:25PM
    Hello and welcome. First, I doubt you are alone in getting that shock once everything is written down! My debt nigh on doubled in reality, to that I had in my mind!

    Anyhooo .... might I suggest you pop over to www.iva.com and have a word with a couple of the companies listed there ( its free). It's a good idea to speak to a few, as it will give you a "feel" for the companies and the information (you will be entering into a 5/6 year relationship!). I, too, did the CCCS calculator and they worked out my payment to be nearly £100 higher than it needed to be. If you look at the beatmydebt.com website, they have a living expenses guide which is useful in working out your disposable income (and looks like the figures my IP used).

    If you can get a basic account with Nationwide (easier while your credit rating isn't shot) I have heard nothing bad about them regarding IVA'ers ( as long as you don't owe them!). I use the Co-Op ... easy to set up and use, and have 2 Cashminder accounts ( I use one of them for a modest savings and contingecy fund account).

    Many people "set themselves up" for a term of frugality ( as long as you don't go overboard) prior to enetering the IVA, the morals of this are open to debate, but, once the route has been chosen and you start preparing papers etc, spending must stop! You can either make token payments or none at all while the application progresses (about 8 weeks) and use this money to set up a contingency fund --- but your IP should discuss this aspect.

    Finally, lots of support is available here and on iva.co.uk (where many IP's post). Best of Luck
  • To_be_Free
    To_be_Free Posts: 123 Forumite
    First Anniversary Combo Breaker First Post
    Hi I have nothing to add to FoggyBrain's reply as he as more knowledge of these things then I do.
    I just wanted to say you are not alone there is a great wealth of knowledge and help on these boards which ever way you decide to go.
    I have been in my IVA for 2.5 years now (half way) and yes it is hard at times, but to be debt free for the first time in 20 years at the end of it and to have learnt how to budget is an experience I will not forget and will hold me in good stead for the rest of my life.
    Free at last
  • debtfree2016
    debtfree2016 Posts: 325 Forumite
    Hello TiedToTheTracks
    Welcome to the site... I had massive debts also and decided like you to grab the bull by the horns... FoggyBrain has given good advice on visiting the IVA website, I opened a Nationwide FlexAccount before I entered an IVA and was approved on the 7th July, I have not had any comeback from Nationwide. The beatmydebt website is good for working how much you need to cover costs per month and makes you think in a whole new light.... the norm would have been to get the clothes / MOT / Dentist etc put onto card and forget about it until the end of the month.... The IVA will re educate you to allow for these costs in life and it will be good to pass onto your 6 & 8 year old...

    Best of luck and keep posting.
    Never make assumptions always ask questions>>>>>;)
  • TiedToTheTracks
    Hello to everyone who has replied and we just wanted to say thank you very much and sorry for not coming back again sooner. As is to be expected, the last week or so have been a total whirlwind of discussions, decisions and concerns. It has been very reassuring to be able to read through the replies and the other messages on this board and to know that we are not alone.

    We are in the process of speaking with ClearDebt (has anyone had experience of them?) who appeared to be very highly recommended on iva.com which we took a look at as advised. They seem pretty confident that we will be accepted once the proposal has been created and submitted.

    We do have a little concern though, we went into the Nationwide and opened up a new bank account. The gentleman who was opening the account for us said, once we had filled everything in on screen, "Right, we are happy to offer you a <slight pause> (and we don't remember the name of the account but we are guessing a cash card account based on the next words) Account and, after three months we will be able to upgrade that to a full FlexAccount and start to transfer your direct debits.... should we be worried about this at all. The last thing that we want to do is to let our employers have the new bank account details and then have to give them new ones yet again if Nationwide suddenly decide to close our account and we have to go elsewhere. Should we see if we are able to open a Co-Op account in the meantime? We weren't too sure if it would show any kind of credit check from Nationwide which would cause issues when trying again with the Co-op?

    We have a further discussion with ClearDebt this evening and we are going to ask the same question then but wanted to check on here also.

    Looking forward to getting the whole process underway now and actually being able to get up each day without worrying if we've missed transferring some money from one place to another constantly.

    Thanks everyone again.
  • FoggyBrain_2
    FoggyBrain_2 Posts: 1,121 Forumite
    Hi. I actually opened a basic account witn NatWest at the same time as applying for a Cashminder with the Co-Op (actually 2 ... one for weekly household expenses, like food and stuff, the other for keeping the larger expenses, like car tax and insurance etc, until needed). Anyway I got all three!
  • TiedToTheTracks
    Thanks FoggyBrain - I think we may well try to open an additional account, just in case. When we spoke with ClearDebt last night our advisor was surprised by the comment but he reassured us that nothing was insurmountable.

    I'm sure that we'll be back with other questions as we go through the process.

    Here's to hoping everything goes through and to being debt free :beer:
  • adyj73
    adyj73 Posts: 166 Forumite
    I opened one with HSBC and also Co-Op just in case - it can never hurt to have two accounts on the go ;)
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